Case 1 – Material Planning / Master Data
Everyone believes (and they are usually correct) that the inventory levels are too high. One of the prime causes of the incorrect material levels to support the production activities are incorrect data in the planning process. Everyone talks about accurate inventory counts or the master schedule as some of the most important activities. Yes, they are important, and don’t believe that just anyone can count inventory. But there are other, more fundamental areas that can cause significant errors in the planning of materials which impact the inventory levels. One area is the bill of materials or recipes and the assumption that they are correct.
It is amazing how many people can look at Bill of Material / Recipe report and when comparing to the original paper bills / recipe do not see any errors. I include myself in this group of people. Towards the end of the day, everything is OK. My favorite errors are around decimals, 10.0 looks a lot like 100 after a number of hours in front of a terminal, that and getting the conversion factor the wrong way round. At least these show up as error with an order of magnitude when you explode the Bill of Materials with some test data. Even if the Bill of Material exactly matches the specification, things can go wrong.
In one facility, we consistently had too much material in inventory at period end, even with the bill of material 100% correct to the paper specification and we were producing to schedule. When we showed the operators a computer generated pick list for the product & asked them what they thought the problem, they told us that if they ever used the quantities of materials listed that the product would never flow through the pipes. It would be too thick. In another case we were constantly running out of one material. When observing the operators producing the product we noticed that they were using 10 times more material in one step that the audited bill of materials called for. And yes, they were correct, for without the extra material, the product stuck to the equipment and did not flow.
The best way that I have found to address this problem (the bill of materials / recipe does not reflect reality) before going into actual production is to perform a shop floor audit. What is reviewed, audited, and approved by management & supervisory staff is not necessarily what happens on the shop floor. Generate a bill of material explosion for normal production batch quantities for the products. Once this is done give the list to the operators who pick & move the material and ask them is it makes sense. Since they move the material all the time they have a good idea of what is normal.
Of course you now have to convince the Quality Management & Product Development people that the plants’ local rules are correct and should be reflected in the corporate database.